|
|
Total Number of Subscribers: 425 |
|
|
|
||
|
|
||
|
Date: 28 March 2008 |
Compiled by : M. Sathya Kumar |
|
|
|
TECH VERTICALS ‘New Standard For
E-reporting Of Corporate Accounts’ Extensible
Business Reporting Language (XBRL) is becoming the new standard for
e-reporting of corporate accounts. Supported by large corporations and
regulatory authorities, XBRL is set to create a new benchmark for quick
dissemination of corporate financial information among the stakeholders. In
an interview with Indranil Chakraborty, PricewaterhouseCoopers (PwC)
executive director, Rajarshi Sengupta speaks on the benefits of XBRL for the
corporate segment. Excerpts: How XBRL will change the financial reporting structure
of the corporate sector? Corporate reporting is in the spotlight today more than ever
before. Though most of the attention has been focused on what is (or is not)
reported, there is another side to the story - how information is being
delivered. While regulators and the markets deal with the ‘what,’ answers to the ‘how’ are quicker in coming. The development of
a new Internet language, XBRL - the business reporting extension of the ‘smart data’ standard, XML (Extensible Markup Language) - is likely to
fundamentally transform how businesses provide information to investors,
markets and regulators - and how each of these stakeholder groups make more
informed decisions. Clearly, the Internet has revolutionised how we communicate -
and this is particularly true in the business environment. Accompanying this
revolution has been a growing demand for businesses to disclose more relevant
information to an ever-wider group of stakeholders, on a more frequent and
timely basis. Do you think that a standarised e-reporting structure
can bring more transparency to corporate financial reports? To meet stakeholder demands for greater speed and volume of
communications, businesses must find better and more effective ways of
communicating. This is particularly apparent in the reporting of financial
information where the use of clearly presented hard facts to drive out market
rumour and guesswork has taken on a new urgency. With business-to-business documents like purchase orders and
invoices, sophisticated systems have been developed to integrate systems and
companies. But to date, there has been a problem with communicating accurate
and unambiguous financial information effectively across the Internet.
Incompatible systems and software have prevented genuine cross-platform
communication and data sharing, and limited the usefulness and transparency
of the reported information. This has left both companies and capital markets
little better off than in the days of the printing press. The advent of XBRL
will change all that. How can it bring transparency? XBRL is platform-neutral - it is the same whatever type of
computer or software you are using. It allows all recipients of financial
information provided in the XBRL format to anlyse and use precisely
categorised information instantly, with no need to re-key or convert to other
formats. XBRL reduces the need for human intervention when moving financial
and business reporting information from one system to another, or one
organisation to another. What other advantages does it offer? XBRL offers many advantages over traditional reporting methods,
effectively freeing information from the constraints of time and place and
providing crispness and clarity. For the first time, creators will be able to
channel the information in their financial statements, without distortion,
directly into the myriad of analytic tools of their investors and other
stakeholders, all in a single format. More trustworthy information when
associated with a digital signature, XBRL has the potential to transform the
corporate reporting supply chain. Its progress in doing so depends on
continued cooperation between the key industry players such as Deutsche Bank,
Ernst & Young, FDIC and General Electric who are members. How will it help the CFOs to create higher standards in
financial reporting? The CFOs can enhance distribution and usability of existing
financial statement information and automate analysis. The potential XBRL
applications for any organisation include: XBRL for financial statements used
for regulatory filings; XBRL for taxes (specification for tax returns which
are filed and information exchanged for items which end up on tax returns); and
XBRL for accounting and business reports. Do you see XBRL becoming the defacto standard of
corporate reporting in near future? Are Indian companies prepared to adopt
XBRL standards? The need for a standard for financial reports is clearly
estabilished today. XBRL technologies is a big step in that direction. At
present, XBRL has no competition. Regulators are getting more and more
convinced that this is the right platform. Some regulators around the world
have set deadlines too. In What is the level of restructuring a corporate has to
do if it wants to adopt XBRL? How much will it cost? There are three requirements for the successful deployment of
XBRL in any organisation. They are: creation of a specification that is the
same for all companies and is consistent from one financial statement to
another; an application that will allow the creation of financial statements “tagged” with XML that adhere to the specifications; style sheets
which render information for a specific or variety of formats. The corporate does not need to do any restructuring, as the
specification will be defined by the regulatory bodies. XBRL is royalty free.
How can business advisory companies like PwC, help the
corporates to adopt XBRL? XBRL is an industry wide effort, which requires participation of
all interested parties in the financial information supply chain and, as
such, PwC is an active participant in this effort. As auditors, PwC has a
particular interest in making sure that the developments in the financial and
business reporting information industry meet the requirement of clients while
also preserving the interest of the financial markets across the world. PwC
also recognises that their clients might need assistance to leverage the
benefits that XBRL brings. For example, when making the change to the
International Accounting Standards, companies will find that incorporating
XBRL into the project will facilitate this transition process. What are the specific areas which can benefit from
XBRL? There are specific areas where the banking or investment
management industry can benefit from XBRL. PwC believes that XBRL is a path
towards leveraging the Web for the benefits of all participants within the
business reporting supply chain, serving the capital markers. It provides
benefits to both creators and users of business reporting information. By
leveraging this e-business suite of technologies, one shifts the fundamental
reporting technology from paper (a 1000-year old technology) to the global
e-business platform - the Internet. PwC expects to help clients leverage
XBRL, as well as to provide an incremental level of assurance upon the XBRL
data elements within the overall reporting process. Is it finding its way inside corporations? With the increase in acceptance and usage of XML in the
marketplace, there is increased recognition of the need to reliably and
securely exchange the easily understandable, modifiable and reusable XML
files over the open Internet, as well as the need to provide assurance that
information received from the Internet is trustworthy. XML is finding its way
inside corporations in many systems. e-Procurement systems that use XML as an
input or output tool were one of the first applications that found their way into
large organisations. More recently, applications of all kinds that bring together
information from multiple, and especially external, systems, have become
mission critical tools. Emerging opportunities, like XBRL, and potential
requirements such as future regulatory of tax filings in XML format, point to
the need for the audit committee to be aware that there are many risks and
oportunities connected with these systems, including security, over reliance
on technology and miscommunication and legal issues related to differences
between the human readable output and machine-readable tags. The accounting profession is beginning to consider how to
provide trust with increased considerations on continuous auditing and
incremental thoughts on assurance for these documents and the data contained
therein. The entire information supply chain, including the W3C, companies,
the accounting profession, creditors, stakeholders and regulators, need to
work together on how to establish the electronic channel of trust for the
capital markets, and PwC is taking a leadership role in this area. How will investors benefit from the adoption of XBRL
standard? XBRL would facilitate better distribution and usability of
existing financial statement information, speed up analysis time and make the
retrieval of information easier. Formatting versatility means that financial information can be
tailored to suit specific analysis and regulatory requirements. Source: http://www.financialexpress.com/old/fe_full_story.php?content_id=60020 |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
Rewards waiting for feedback at |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
Disclaimer: We believe that the information contained in this e-zine is true. If you do not wish to receive Smart Trainee please click here. |
|
|
|
||
|
|
|
|
|
|
Click here to contact us, if you are unable to view the content properly |
|
|
|
|
|
